BALANCE SHEET Cash $ 340,000 Accounts Payable $ 2,720,000 Receivables 4,200,000 Accruals 980,000 Inventories 4,960,000 Notes Payable 1,300,000 Total Current Assets $ 9,500,000 Total Current Liabilities $ 5,000,000 Net Fixed Assets 2.500.000 Long-term Debt 2,000,000 Common Stock 3,800,000 Retained Earnings 1.200,000 Total Assets $12,000,000 Total Liabilities and Equity $12,000,000 INCOME STATEMENT Sales Less: Operating Costs EBIT Less: Interest EBT Less: Taxes (40%) Net Income Less: Dividends Additions to Retained Earnings $36,500,000 29,200,000 $ 7,300,000 500,000 $ 6,800,000 2,720,000 $ 4,080,000 3,500,000 $ 580.000 . . You expect sales to increase 25% next year. Assume you are currently operating at 90% capacity Interest expense next year will be 14% of any interest-bearing debt balance at the beginning of the year Dividends will increase 40% next year Operating costs are 50% fixed and 50% variable Days Sales Outstanding are expected to increase by 4 days next year Days Payables Outstanding are expected to decrease by 2 days next year Using a pro forma income statement to estimate the additions to retained earnings, how much external funds do you project needing to support the 25% sales growth? If the additional funds were raised using long-term debt, immediately, how would that affect your additional funds estimate? Project your income statement and balance sheet under both scenarios: first estimate and second estimate